Bernard (Bernie) W. Stern: Professionally active in labor relations for well over 50 years, he headed Benefit Plan Consultants, a company that designed and supervised health and pension plans for labor and management groups. Before coming to Hawaiʻi in 1962, he was a negotiator and researcher for the Mine, Mill and Smelter Workers Union and later a labor economist for th9;ie National Labor Relations Board. From 1962-1965 he was an assistant to Art Rutledge. For twenty years after that, he worked as a consultant and mediator to Hawai'i's labor community. In retirement, he began writing labor history. His first book, Rutledge Unionism (1986), described labor relations in Honolulu's transit industry. Sadly, he died May 4, 1988, shortly after completing work on this study which was published posthumously.

In 1996 the Center was transferred to the University of Hawai'i
- West O'ahu.

To order a hard copy of the original publication, click on the
cover graphic above.

NOTE: At the time of publication, diacritical marks (the 'okina and kahakō), now accepted as appropriate for Hawaiian words and names, were not included; whereas this online version does include them to the extent html codes allow, except when rendering the names of hotels, ships, institutions and/or organizations that did not at the time employ them. In addition, the original work employed footnotes that used symbols and not numbers at the bottom of each page. This online version does not retain page divisions, so all footnote have been converted to sectional endnotes.

Table 2. Number Eligible to Vote in Which RepresentationRights
Were Won

Total Eligible

ILWU

Local 5

Neither

9616

3803

903

4910

These overall figures obscure more recent significant trends. Local 5, for example, has won only one election on the neighbor islands in the past 16 years (Sheraton-Waikoloa in 1984). ILWU, in the past eight years, has won one important election (Hyatt Regency-Maui, October 1980), and since then has lost 15.

Several hotels have become particularly adept at resisting union organization. On the neighbor islands, two in particular stand out-Intercontinental and the Amfac Group of hotels (Island Holiday).

Intercontinental, part of a multi-national chain of luxury-type hotels located throughout the world, defeated five separate attempts at union organization by overwhelming margins. Originally owned by Pan-American Airlines (now owned by Grand Metropolitan, a British conglomerate), the hotel retained the Hawaii Employers Council as its consultant in resisting organization of its employees at its Wailea, Maui property. Its appeal to employees "to give us a chance" when it was experiencing low occupancy rates (for many years) struck a responsive chord, according to union sources. Also effective in tying employees closer to the company, according to these same sources, were its "strawberry nights" (a program under which employees with one year or more of service may stay at the hotel one day and one night as a guest of the hotel), moonlight cruises for employees and similar events.

Island Holiday, over an 18-year span (1963-1980), lost only two elections to unions in 14 contests. The results can be attributed to two "local boys"32 who ran the company's campaigns--Lyle L. "Gus" Guslander and Laurence "Pat" Perry.

Guslander, over a six-year period as manager of the Moana Hotel in Waikīkī, dealt with Local 5 as the representative of its employees. In 1953 he bought the Coco Palms Resort on Kauaʻi with a $25,000 loan and over the next 16 years acquired nine more hotels to create the Island Holiday chain, the largest on the neighbor islands. In 1969 he sold his chain to Amfac for about $20 million and then stayed on as an Amfac vice president until his retirement in 1978. (He died in 1984.) Guslander set the labor relations policy that became the Island Holiday hallmark. Wages and benefits varied only slightly from prevailing union contracts.33 Close attention was paid to personal relations with hotel workers. One ILWU organizer tells of an incident that could probably be repeated many times. In one of the early King Kamehameha elections he was practically driven out of a hotel worker's home that he visited at night. The worker's wife, on the way out, showed him a small cake, "possible cost about 90 cents," with "Happy Birthday" on top that her husband had received that day. "You see," she said, "we're well taken care of. We don't need any unions here."

During the period (before April 1969) that Guslander handled his own labor relations, both unions were defeated in three NLRB elections. After April 1969, when Pat Perry came to work for Island Holiday, there were 11 elections in which the ILWU won two, King Kamehameha and Hanalei (no longer in operation), both in 1970; both unions were defeated in nine.

Perry was hired as Island Holiday's industrial relations director in April 1969, a few weeks after he left a position as senior business agent with the Hawaii Teamsters Union under Rutledge. Perry had been with the Teamsters for five years after his return to Hawaiʻi, where he was born. Before that he had held several union jobs on the mainland after receiving his degree from the University of San Francisco in 1957, where he majored in industrial relations. Perry combined his understanding of the importance of the "local" touch with an expertise in labor relations that has thus far thwarted efforts at new organization in the chain.

Island Holiday now represents three hotels in negotiations with the ILWU-King Kamehameha (won in an NLRB election in 1970) and two others at Kaʻanapali, acquisitions after they had already been organized by the ILWU.

By 1986, the ILWU held bargaining rights in 15 neighbor island hotels;34 in 11 of these, representation had been won the "hard way"-by organizing workers and winning elections. In four situations (Kona Surf, Maui Surf, Mauna Lani, and Makena Prince)35 the union had gained recognition via the cross-check route.

Within the immediate future, the ILWU should show a big increase in membership because of expanded operations at several hotels where they now hold bargaining rights-at the Westin Maui and Westin Kauai (formerly Maui Surf and Kauai Surf), the Mauna Kea and Mauna Lani. The big organizing contest will be at the Hyatt Regency Waikoloa now under construction on the Big Island, one of the largest hotels in the state, due to open in 1988. The ILWU now holds an organizational advantage in this situation because of an already established organizational base on the island.

Hyatt management has recognized the ILWU on the basis of a card check. Local 5 has filed charges of unfair labor practices and the issue remains unresolved. Should the ILWU finally win representation-that, plus the expanded membership in already recognized properties, would make it the largest single hotel union in the state.36

NOTES:

Later, the Congress of Industrial Organizations.

William J. Puette, The Hilo Massacre: Hawaii's Bloody Monday, August 1st, 1938 (Honolulu: University of Hawaiʻi, Center for Labor Education and Research, 1988).

As quoted in John Reinecke, A History of Local 5 (Honolulu, Hawaiʻi: University of Hawaiʻi, Labor Management Education Program, 1970), p.15.

The various changes in Sheraton's policy toward union recognition over the next 40 years will be traced in later sections of this study.

The Local remained independent until January 1950; what was left of its original membership then returned to Local 5

Union shop provision requires all employees to become and remain union members as a condition of employment.

A maintenance of membership clause requires employees who are already union members to retain such membership for the life of the contract.

At a meeting of the Western Conference of Teamsters held in Honolulu at about this time, Rutledge appealed for financial help to build a "powerful anti-communist labor movement here." The Teamsters, he said, were being squeezed in the middle in Hawaiʻi by the "powerful and ruthless Hawaii Employers Council on the right and the 'Communist-led ILWU' on the left."

At several of these hotels-e.g., the Kelley hotels, the Waikiki Biltmore, and the Hawaiian Village-later elections were held to confirm the Union's status.

In the sixties some 6500 new hotel units were built on Oʻahu. Local 5 organized hotels with about 1250 units. In the seventies approximately 13,900 new units were built. About 6500 were organized by Local 5.

The February issue of the Local 5 Organizer, issued just before the NLRB election on February 14, 1964, carried a front page picture showing Conrad Hilton, president of the Hilton hotel chain, shaking hands with Arthur Rutledge, both of them flanked by Roy Kelley of the Kelley hotels and Ed Hastings, executive general manager of Hilton Hotels in the Pacific. The picture was taken at the formal opening of the Kahala Hilton and carried this caption:

The imposing new hotel isn't formally signed up yet, but from the look in Brother Rutledge's eye and the smile on Hilton's face-and from other sources-an early contract seems sure.

Local Chinese businessman who in 1945 established Capital Investment Company and other enterprises that made his fortune in purchase and development of land.

In the first NLRB election, held a year earlier, Local 5 failed to win a majority. ILWU intervened in that election but won only 25 votes, slightly over seven percent of all votes cast.

The Makaha Inn underwent some changes in ownership. In early 1973 it was sold to a Japanese company, Hawaii Daiichi Kanko, then closed down in the fall of 1975. In December 1977, it reverted to Makaha Valley Inc. (MVI) as the result of a public auction.

Because of ownership of the hotel by American Airlines.

We learned from non-union hotel personnel, who asked not to be identified, that there is some basis to the charge, although it is not clear whether Del Webb himself or his people in Hawaiʻi were responsible for what happened.

There were only two other significant strikes (excepting many short work stoppages of from a few hours to three days) waged by Local 5 in Waikīkī in its entire history (up to 1987). Both of these strikes-the Halekulani in 1963 (lost) and the Ilikai, 1965-1966 (won) -were for first contracts. Both are covered in later sections of this study

The Union handbook, distributed to all active members, states:

One way in which the union seeks to advance the interests at its members and the general welfare of the community is by obtaining effective labor representation on public boards and commissions which affect the interests of ILVVU members. No union member should accept an appointment to such board or commission without first consulting an official of the Division or Local Political Action Committee, however. Where union men serve on public boards without being systematically informed on what the union wants, they cannot truly represent labor. Instead, they will hurt labor by giving the false impression that labor's interest is being protected when it is really not even represented.

As recently as July 23, 1987, the Advertiser, in listing Tommy Trask, Hawaii Regional Director of the ILWU, in a series "People With Pull," explained the reasons for his union's influence:

It has been the union's influence in zoning matters-the ILWU often has a presence on the zoning and land use commission-that explains in large part why developers will seek out Trask.

57 Haw 87, 550P.2d 1275.

It had previously (since 1955) dealt with the ILWU for its Kona Inn and Kauai Inn employees.

A procedure whereby a neutral person counts and certifies that a majority of employees have signed application cards with a specific union. Normally, if a petition from a rival union is not pending at the time, recognition of the certified union is legitimate and the rival union, if there is one, is foreclosed from seeking an NLRB election. The procedure obviously requires close cooperation between a company and a union since, by agreeing, the company waives its right to insist on an NLRB election. (The procedure is also called a cross-check.)

Newton Miyagi, a member of the. Board and Local 142s secretary treasurer was not present when the vote was taken. He was present however, when the Board later refused to reconsider its vote after objections voiced by opponent", of the plan.

This cross-check differed from later cross-checks in that the parties had no alternative. The NLRB at that time was not processing hotel cases (a position that was later changed) and the Territorial Department of Labor refused to conduct an election.

This was the only occasion on which Rutledge supported the ILWU's organizing efforts in the hotel industry. The support was the indirect result of a Unity Pact, signed on July 29, 1959 in which Teamsters Local 996 (Rutledge's other union) and the ILWU agreed to help each other organize. A Joint Organizing Board ("JOB") was established and jurisdictions of each of the unions was defined (not including hotels); the pact lasted about two years. In the first Inter Island election in 1960, before it withdrew, Local 5 ran a poor second.

After challenge by Local 5, the NLRB ordered an election, which was won by the ILWU, then ruled invalid by the NLRB, but ultimately upheld by the Ninth Circuit Court of Appeals.

Although later forced to go to an election by the NLRB. after ILWU challenge, Local 5's bargaining rights were overwhelmingly confirmed by a 140-30 vote in May 1963.

Later bought out by the Royal Lahaina.

Later bought from Inter Island Resorts by Hemmeter Investment Company and VMS Realty and closed down in December 1985 for a construction program to add 213 rooms, the renovated hotel was due to open as the Westin Maui sometime in 1987. The new owners agreed to recognize the ILWU contract when they reopen for business.

The ILWU proposed another debate between Tangen and Rutledge in the September 1968 Kona Hilton Election; Rutledge with a clear advantage (Hilton had already extended the Waikīkī contract to Kona) declined. Again, in the Kuilima election in 1970 on Oahu, Tangen suggested a debate between himself and Arthur Rutledge; Tony Rutledge (Arthur Rutledge's son. also a Hotel Workers Union official) countered with a proposal for a de-bate between the elected officials of each local (Arthur Rutledge and Dick Tarn for Local 5 versus Carl Damnso and Newton Miyugi for the ILWU). The counter proposal was not accepted.

The total includes many repeats: it does not include elections that were declared invalid because of some unfair labor practice (the rerun is included), or selections in which there was no majority (the runoff is included).

These include some elections in which Local 555 (see Part V) acted is a kind of proxy for Local 5.

Although the term "local boy" is usually applied to persons born and raised in Hawaiʻi, newspapers used the term in writing of Guslander because of his long association (since 1947) with the hotel industry in Hawaiʻi.

One example-instead of a pension plan, Island Holiday employees were covered by a profit sharing plan which, according to reports from both company and union sources, was generally popular with employees. In the early 1970s the company also instituted a pension plan for hourly employees.

]Including Westin Maui and Westin Kauai, both of which were shut down for extensive renovation but due to reopen in 1987.

Settled through sale of
various pieces of property and proceeds split between Local 5 and Local 996

75579

Local 5

For share of money
transferred from Unity Council to Unity House

After trial, Local 5
awarded portion of what was requested in complaint

82008

Local 5

To deny Arthur Rutledge
personal pension previously voted to him on theory that he was not available
for "consultation" with Local 5, a condition of receiving pension.

Verdict in favor of
Rutledge

The two Rutledges, originally appointed as Local 5 trustees, were also later designated as Local 555 trustees. They charged that, by their removal, Local 555 was denied representation on the trustee boards of these funds. At the time, Local 5 had approximately 10,000 members, Local 555 about 1300.

In April 1981, after nearly three months of hearings, Federal Judge Martin Pence ruled that the Rutledges had filed a "frivolous" suit against the trustees. The judge said of the Rutledges and Local 555, "It was a deliberate attempt on their part to frustrate the normal result of a change in administration which occurs in unions."

The judge further ordered the two Rutledges to pay two-thirds of the legal costs spent by Local 5 in fighting the suit. He later assessed both Rutledges and Local 555 $20,836 in attorney fees plus $6,021 in costs.

The Rutledges and Local 555 later appealed Pence's decision to the Ninth Circuit Court of Appeals; the Appeals Court confirmed the lower court decision.

The Unity House Case

The Unity House case, filed by Tam and five other individuals (three from Hotel Workers Local 5, two from Local 996) has been in litigation since December 1978 and as of this writing (August 1987) still remains undecided.

Even before the appeal to the Intermediate Court of Appeals was taken, Arthur Rutledge estimated that the suit cost Local 5 $1 million (Tam said $200,000); defense of the suit, said Rutledge, cost $400,000 to $500,000.

Unity House Inc. (present name assumed in 1956) was originally chartered in 1951 as the Hawaii Federation of Labor Memorial Association, a non-profit corporation. It was originally financed by non-interest bearing debenture bonds, in $10 denominations, sold to members of both Hotel Workers Local 5 and Teamsters Local 996. In 1957 Unity House constructed the Unity Building with money loaned by both unions. Unity House rented space in the Unity building to both unions. In 1974 Unity House built and became owners of the Waikiki Marina Hotel, situated next to Unity House.

After the Unity House building was completed each of the two unions contributed a monthly charge per member to Unity House Inc., variously referred to as "dues," "charges for office space," "administration services," and for "other services." As of January 1980 before Local 5 physically moved to another building, these monthly charges were $1 per member. As of June 1980, according to an outside appraisal, the assets of Unity House Inc.-the Unity House building and the Waikiki Marina Hotel-were valued at $14 million.10

In their original complaint, filed in December 1978, Tam and his fellow plaintiffs claimed that by virtue of their membership in Locals 5 or 996 they automatically became and remained paying members of Unity House. They charged that because of mismanagement and breach of fiduciary duties, Arthur Rutledge and other officers should be replaced by an appointed impartial receiver to manage and control the corporation, and asked that after the corporation's affairs were in order, an impartial and fair election be arranged to duly elect new directors and officers.

In February 1982 the complaint was amended both to ask for a permanent injunction enjoining Rutledge from managing or using the corporation's assets in defense of the suit, and also ". . . to completely effect the dissolution of the corporation (with a sale of all of the corporation's non-cash assets) . . . and to disburse the resulting cash assets among the corporation's creditors and members."

In the 1983 union election (discussed later) the Dick Tam slate, "Team for Democracy, 1983," in a leaflet distributed to members, claimed that:

Dick Tam fought hard to get the members money back from Unity House ... Right now Dick and the TEAM are in court going after fifteen million dollars more.
YOUR money. It's been locked up at Unity House for years, benefitting only a selected few. DICK will get back the money and return it to you. You, the individual member. NOW when you need it the most. (boldface in original)
Both complaints charged Rutledge with failure to hold elections of officers or directors or meetings of the corporation since about 1961, and with certain specific breaches of his fiduciary duties:

Receiving a personal loan of $25,000 in 1964, on which no interest was paid until 1977.

Use of Unity House personnel to maintain his private residence.

Occupying an apartment in the hotel with his wife without paying any rent.

Permitting his son to occupy a penthouse apartment in Unity House at no charge.

The charges finally came to a non-jury trial before Circuit Judge Richard Y. C. Au. After many months of hearings and frequent delays to permit the parties to work out a solution, the judge
found that all of the ". . . misconduct, breaches of fiduciary duties, wrongdoing and illegal acts . . . have been corrected since this action was instituted or were de minimis." He further found that it was impossible to determine, from the evidence advanced, the plaintiffs' status as members of Unity House. He concluded that plaintiffs failed to show that they "fairly and adequately represent the interests of the membership of Unity House," and entered judgment for Rutledge and Unity House.11

About a year later the Hawaiʻi Intermediate Court of Appeals, reviewing the case on appeal, agreed with the trial court that plaintiffs did not, because of their membership in Locals 5 or 996, automatically become members of Unity House and had no standing to bring this action.

Thus, in 1987, after over eight years in the courts, Art Rutledge appeared to be firmly entrenched as the President of Unity House Inc. and in virtually undisputed control of its assets. But in August 1987 his status again became uncertain when the Hawaiʻi Supreme Court reversed both the Intermediate Court of Appeals and the original Circuit Court decisions and remanded the case to the Circuit Court for further hearings and findings.

The Supreme Court noted that it granted the petition seeking further review of the trial court's decision because,

... we were troubled by the appellate court's ruling, which in essence was that equitable relief for plaintiffs was barred because of the defendants' failure to abide by a charter provision governing membership in the corporation, as well as the trial court's ruling that 'the equitable remedies requested by Plaintiffs are not practicable.'

The Supreme Court noted that the Circuit Court "failed to recognize that the plaintiffs were seeking redress to injury for them individually as well as to the corporation . . ." "This, in our opinion, was error . . ."

The Circuit Court, it was held, had it within its power, where it could not grant the specific relief prayed for, to fashion appropriate relief on its own, under the prayer for general relief in the complaint.

Given the abundance of proof that Unity House had obtained large sums of money and services from members of Local 5 and Local 996 laboring under a belief induced by Rutledge's frequent representations that they were members of the Corporation, equitable relief enabling the plaintiffs to exercise membership rights was in order.

A Wide Open Campaign

Richard Tam's campaign for more openness in the union probably reached its peak in the 1983 election for union officers when 56 members on five different slates filed as candidates for office. Lined up against Tam and his slate were four other slates headed by aspirants for Tam's. position, including two of his staffFrances "Mac" McCallum, the local's president who was Tam's running mate in the 1980 elections, and Malcolm Sur, a Local 5 business agent. The main contender for Tam's position, as in the 1980 election, was again Tony Rutledge, who still held the position of Organizer and Vice-President of the International union. Also filing for the head position in the union was Sally Gomes, a waitress at the Sheraton Waikiki and a former business agent under Rutledge for 10 years who was fired by Tam. Although elected to the executive board as a Tony Rutledge supporter in 1980, she now charged that neither Tam nor Rutledge represented the rank and file.

To Tam, the large number of candidates was an expression of democracy. "I ran on the avowed purpose of developing democracy, and this is a by-product of it," he told a reporter. "I know this could never have happened 5 years ago because of dominance, atmosphere, fear."

To Tony Rutledge, 56 candidates represented a "circus." Charging that Tam had ". . . spent over $3 million [of assets now at about $7 million] in three years with nothing to show, except a circus of 56 candidates," he said, ". . . That's a hell of a learning experience."

The three "minor" candidates (as shown by the final results) charged Tam's rule as "dictatorial," "expensive (waging vain lawsuits and taking petty grievances to arbitration that should have been solved informally)." They blamed him for loss of recognition at the Prince Kuhio hotel (discussed later), and with loss of five organizing campaigns.

Both McCallum and Rutledge raised the issue of Tam's relationship with the law firm of Gill, Park, Park and Kim. Tony Rutledge claimed that attorney's fees had cost the union $500,000. McCallum, in a newspaper interview, charged that the law firm "... runs Local 5."

Rutledge, in a steady stream of leaflets and bulletins to the membership, charged Tam with "inexperience in decision making," a lack of accountability, and squandering of union assets.

Tam's slate included Romeo Mindo as the candidate for president, to replace McCallum, plus several new faces. They identified themselves as Team for Democracy, 1983. In newspaper interviews and bulletins Tam stressed his "accomplishments" (cutting Local 5's ties to Unity House, electing shop stewards, holding regular membership meetings, distributing by-laws to every member, increased pensions, improved health and welfare benefits, and the winning of arbitration decisions). He defended his record on organizing by claiming that he was inhibited during the first two years of his term because of the "conflict of interest" charges that hung over the union because of the connection between Unity House, as the owner of the Waikiki-Marina Hotel, and the Rutledges. Tam stated on more than one occasion that Local 5 members had a claim to the assets accrued by Unity House. And, as has already been promised, a leaflet issued by the Tam's Team for Democracy, 1983 promised that "DICK will get back the money and return it to You, YOU, the individual member."

When the election results were announced on January 28, 1983 by the League of Women Voters, which did the ballot count, Tam's slate had made a clean sweep of all offices. His total for the head job was 2428, about 45 percent of the total votes cast, and 708 votes more than Tony Rutledge received. The three other candidates received an aggregate of 1271 votes, about 23 percent of the total; McCallum, the incumbent president received the lowest vote-161, less than three percent of all votes cast.

The results of the 1983 election made clear that despite organizational setbacks in 1982, Dick Tam still had the support of his membership.

The Beginning of the End

If one were to pick a single event that marked the beginning of Dick Tam's slide from power as Secretary-Treasurer of Local 5, the 1984 Master Agreement negotiations would be a likely candidate. This is said despite overwhelming membership acceptance of the settlement in a referendum vote (2-1), against an organized opposition, and also in full recognition of the fact that Tam might have yet prevailed over Tony Rutledge in the 1985 election but for an administrative blunder that probably deprived him of several hundred votes.

The 1984 negotiations, despite some gains, also contained many concessions, or give-backs, something not uncommon in many settlements at that time, but a first for Hawaiʻi hotel negotiations. The full impact of these concessions was not immediately felt by the membership but, by the time of the 1985 election (with frequent reminders from Rutledge publicity), were better understood. -

The 1984 negotiations were also unique in that a majority of the negotiating committee (seven out of 12, including some staff persons) opposed the final settlement and urged the membership to reject it. Tam won acceptance of the contract but the rift created in the Local's leadership carried over into the next year's election.

Background of Negotiations

In the 1981 negotiations, under a wage reopener provision of the 1977 contract, the original expiration date of May 31, 1982 had been extended to February 24, 1984. Negotiations started in December 1983 and continued until nearly the middle of March 1984. These negotiations occurred against a depressing background of serious problems, defeats, setbacks, frustrations and harassments-a chain of events largely stemming both from economic circumstances and a persistent opposition mounted by the Rutledge forces. The particular incidents involved included the Kuilima hotel situation, Tam's becoming trustee of Local 555, the organizational attacks by a "new" independent union, loss of membership at the Miramar hotel and at one group of Kelley hotels, and a complete rout during negotiations at another group of Kelley hotels.12

When the Hyatt Kuilima, after a seven-month shutdown, reopened as the Kuilima Turtle Bay under new management, Hilton, (but with the same owners, Prudential Insurance) about 55 former employees were not rehired and others were rehired at lower pay. Local 555, under Tony Rutledge's leadership, challenged Local 5's handling of the situation, filed unfair labor practice charges against the company, picketed the hotel and the other Hilton operation on Oʻahu (the Hawaiian Village)-all of this while Tam was trying to organize Kuilima employees and negotiate a new contract with the new management. When the contract was finally settled on February 13, 1984, Tony Rutledge immediately termed it a "sellout."

After Tam complained to the International Union about Tony Rutledge's conduct, the International Union, in early December 1983, named Tam as trustee of Local 555 and filed charges against the local based on fiscal mismanagement "and interfering with Local 5's organizing efforts at Kuilima."
Tam then suspended all of Local 555's officers and seized control of all of its records.

Rutledge forces13 immediately responded to these acts by announcing the formation of a new union, the Independent Service and Culinary Workers Union, and proceeded to file petitions with the NLRB for representation of 326 employees at seven hotels organized by Local 555; for representation rights at other hotels, and for elections to revoke union-security agreements (requiring deduction of union dues from employee paychecks) at still other hotels.

Within weeks, Tam, as head of Local 555, became immersed in several serious defeats and setbacks, notably the Miramar Hotel situation (originally handled by Tony Rutledge, although backed by Tam) and the Kelley hotels negotiations and deauthorizations.

At Miramar, about 130 members of Local 555 were permanently laid off as the result of a change in ownership. Continued picket lines and a federal court complaint failed to alter the situation.

More shattering defeats were suffered at the hands of the Kelley hotels. Local 555 held contracts with six Kelley owned hotels (all in what was then called the Hotel Operating Company of Hawaii). The new independent union filed petitions for elections at these hotels, but later withdrew them on the same day that a petition for decertification was filed. On March 14, 1983, just before Local 5 members were to vote on the settlement in the Master Agreement negotiations, employees of these six Kelley hotels voted 122 to 9 for decertification of Local 555.

At this same time, Tam was hopelessly mired down in extremely difficult negotiations involving two other Kelley hotels which held contracts with Local 5. While faced with totally unacceptable proposals by the employer he was unable to rally the members in any kind of resistance,14 and the union sat by as the employer declared an impasse and later unilaterally imposed its own terms and conditions, without union representation.

The 1984 Master Hotel Contract Negotiations

The economic setting was mixed and uncertain as negotiations between Local 5 and the Council of Hawaii Hotels, representing 15 hotels (11 on Oʻahu, four on four different neighbor islands) got under way in the first two months of 1984.

The 1981 wage reopener negotiations occurred during a two year decline in the number of arriving visitors (-.7 percent change in 1980, zero percent change in 1981). There had been a slight increase (7.8 percent) in 1982 and a much smaller increase (2.9 percent) in 1983. There were much healthier gains in the first two months of 1984 but the employers, in letters sent to all employees in early March (identical letters signed by the manager of each hotel), wrote that ". . . a long term contract cannot be based on two months of business" and flatly predicted ". . . the current level of business will not be maintained throughout the year."15

Tam, from the outset of negotiations, found himself caught between two opposite pressures-a firm, coordinated approach by the Council seeking changes in the health and welfare program (a major objective) and other cost concessions on the one hand, and an organized opposition within his union ranks that pressed for stronger resistance to employer demands.

Shortly after the contract expired on February 29, 1984 Local 5 took a strike vote of its membership-3801 voted for, 176 against. A committee of seven members then sent a resolution to the negotiating committee urging immediate appointment of a strike preparation committee to formulate detailed plans necessary to run a successful strike.

No such action was taken. Negotiations continued until early in the morning of March 15 when, despite the negotiating committee's rejection of a last three-year contract offer by the employers (by a vote of 7-5), Tam reassured the employers that he would support ratification of the offer in a referendum vote.

At a mass meeting called later that morning and at another afternoon meeting at the Waikiki Shell, an outdoor amphitheater, Tam and other members of the negotiating committee debated the proposed settlement. Tam's opening remark at the morning meeting was "Friends, I'm happy we're not on strike."

Tony Rutledge issued a statement urging members to reject the proposed settlement.

In a statement distributed by the negotiating committee majority, "Negotiating Committee Majority Report Why You Should Vote No On New Contract," particular objection was made to the give-backs and concessions.

The removal of the Maintenance of Benefits (MOB) provision in the health and welfare program,16 the statement said, ". . . makes it almost certain that you will have to pay out of pocket for your medical coverage or see your medical benefits reduced".17
The Majority Report also objected to other concessions:

A two-cent pension plan increase ". . . may be deducted to cover your medical cost increases"
A 20 percent reduction in wages for new employees for the first 60 days (previously 10 percent)
Ten percent less on short shift premiums
Banquet tips reduced to 10 percent from 15 percent Elimination of 25 cents/hour premium for shop stewards.
The committee also thought the 13 percent increase over three years was insufficient.

Tam's letter to employees emphasized the wage increases over the three-year period-4%, 4%, 5%, with some variations for hotels experiencing financial problems,18 increased contributions for health and welfare benefits-from 64 cents/hour to 78 cents the first year and, if needed, 86 cents and 98 cents in subsequent years (but with no mention of the elimination of the MOB provision), paid meals for non-food and beverage employees, improved vacations, more for pension contributions, higher porterage (guaranteed tips on baggage handling for group tours).

When the referendum vote was tallied in late March the new proposed three-year contract was ratified by a better than two to one margin.19

The impact of this settlement was to be debated well into the next year, when there was a new election for local officers, and beyond.

The 1985 Election

The 1985 election that ended Dick Tam's six-year control of Local 5 was the end result of an election campaign that was waged by both Tam and his opposition for over a year.

At the October 1984 meeting the membership adopted charges accusing Rutledge of "gross disloyalty" and "conduct inconsistent with his duties as an International Vice-President" based on his assisting the "new" independent union at an NLRB hearing.

Three months later, Tam, in his role as a trustee of Local 555, together with his Administrative Assistant, Bill Fuhrmann, filed charges with the International Union to have Tony Rutledge removed as an International Vice-President. Charges included "gross disloyalty" "gross inefficiency," "fostering secession" in encouraging Local 5 and Local 555 members to form the independent union, and that he had unsuccessfully sought to replace Local 5 at Turtle Bay and at other companies.

Tony Rutledge denied having anything to do with the independent union.

Worth noting here is that even if the charges against Tony Rutledge had been upheld and he had been removed as an International Vice-President, he would have still been eligible to run for local union office. But such an outcome would clearly have discredited Rutledge and made his election more difficult.

Three-and-a-half months after Tam filed the charges, International President Hanley notified Rutledge, by letter, that the charges had been filed and that a hearing would be held during the month of June 1985. A month later Hanley wrote that the hearing would be postponed until further notice.

In April 1985 Rutledge forces secured 627 signatures on petitions withdrawing the charges against Tony Rutledge. And, at the July 1985 membership meeting, the members adopted a resolution dropping the charges.

International President Hanley wrote to Tony Rutledge, on September 23, that the resolution adopted at the July 21 meeting was invalid.

The fact remains that in spite of these letters from Hanley, the International union officials never acted on the charges.

Both candidates fielded full slates and ran wide-swinging campaigns.

Tam mostly defended his record on wage gains and increased contributions to both the health and welfare and pension plans. His attacks on Rutledge centered on alleged financial irresponsibility. Tony, he claimed, had run Local 555 broke. "You can't trust Tony" one leaflet said, "he uses union funds as his own bank account."

Tam also asserted that he was seeking to recover over half a million dollars, "monthly assessments to Unity Council from 1954-1977" that Art Rutledge "refused to return." If Tony gets elected, his leaflet stated, ". . . he will drop our suit against his father."

Tony Rutledge's campaign launched broad attacks on many fronts. With the aid of an experienced public relations man he mailed out frequent leaflets, pasted bumper stickers on his supporters' cars-all with an imprint of his face, his name and the slogan "Let's Get Local 5 Moving Again."

Over a period of many months, Tony's leaflets charged Tam with weak leadership, loss of members, a poor negotiated contract, squandering of union money on excessive legal fees. In an eight-page bulletin mailed out near the end of the campaign all the charges against Tam were summed up in the front page head: "Tam's Poor Record Is Only Issue Of Campaign."

Rutledge forces billed Tony Rutledge as "The Best Labor Negotiator in Hawaii" in a leaflet that listed contract gains negotiated for various Teamster contracts.

Rutledge, in a signed letter to union members, also urged them to apply for union staff positions. The letter concluded, "Let me make clear, experience is not a major factor. All applicants will be interviewed . . ." To the letter was attached a list of 26 staff people and their "1984 salary."

Rutledge also took mixed positions on the pension issue. In several leaflets he criticized the recent pension increase as totally inadequate. One leaflet complained, "COULD DICK TAM LIVE ON THE MEAGER PENSION HE PROVIDES? . . . Longawaited increase is only 80 cents."

After the International Union's Director of Organization, Vince Sirabella, at a luncheon for Local 5 retirees, praised the pension plan as the "best local union pension plan in the country," Rutledge put out a leaflet with Sirabella's statement on the top followed by "Guess who negotiated it for you? Tony Rutledge." The text then went on to charge that "Tam and Team Robbing Your Pension to Cover Shortages in Medical Plan."

When the vote was finally tallied in January 1986, Tam had lost to Rutledge by a margin of 485 votes--2900 to 2415-but everyone else on his slate defeated candidates who ran with Rutledge. Under the local union by-laws, the Financial Secretary-Treasurer is the decisive power that runs the union.

At least two factors contributed to Tam's defeat-(1) the way in which loss of spouse benefits under the health and welfare program was handled, and (2) Tam's isolation from the members during the campaign. How much each influenced the final result is open to debate and speculation.

After the 1984 settlement, trustees of the Health and Welfare Fund, in order to minimize costs, agreed to charge a $40 monthly fee to cover those spouses of eligible members who were also eligible for coverage under other health and welfare plans. Many such spouses, for years, had been covered under the hotel plan, even though eligible under their own employer's plan, because the hotel plan's benefits were generally superior to almost any plan provided by other employers. Isolating and identifying those spouses who were eligible under other plans was a detailed administrative chore that took several months. Although the effective date for the new regulations was set for January 1985 many members did not provide the needed information until many months later and their spouses continued to be carried by the Fund. Finally, in December 1985, the administrative office sent letters to all such members20 asking that they reimburse the Fund for the money that the Fund had spent on their spouses' coverage, in many cases exceeding $400. These letters reached members just weeks before the election. If, and we have no way of knowing for sure, 243 members were turned against Tam by these letters, that would have completely changed the election results.

The other factor contributing to Tam's defeat grew out of a brutal beating that he suffered in November 1984. While walking from his car on the office building parking lot he was attacked from behind by an unknown assailant; he suffered a fractured jaw and several facial lacerations. More than a month after the incident Tam, while still in the hospital, told a reporter that he felt the beating was union related, "a professional job," but thereafter never further clarified that statement.

On his return to work several months later, Tam was provided with a bodyguard at union expense but by the time of the election that protection was dropped. Tam later claimed that because of this beating he was reluctant to go out and mingle with members on the job, particularly in the Waikīkī hotels, as had been his custom for many years, and that this may have influenced the election results.

After Tony Rutledge's election, there were drastic changes in the union leaderhip. Within a few months after he took over, all but two or three of the business agents, including some who had been elected to the Executive Board, were no longer on the payroll. More important, there was a new style of leadership.

NOTES:

Except for one year during which he worked for the Hawaii Teamsters Local 996.

Rutledge eventually dropped his claim that Tam had vacated his elected position of Secretary-Treasurer of the local union, particularly after the U.S. Labor Department and the U.S. District Court became involved in the proceedings.

In 1978, the head job, the one that Art Rutledge had held for 39 years was "President and Business Manager," and the Executive Board consisted of seven members. Between 1978 and 1980, when the next election was held, the head position, by action of the Executive Board, was designated as "Financial Secretary-Treasurer" with the "President" occupying a lesser but still important position as head of the Executive Board. The Executive Board was enlarged to 14 members.

Within a week after Tam was nominated, the chairman of the Union Elections Committee, a local business agent, served him with a copy of a letter addressed to International President Hanley stating that Tam's name would be withheld from the ballot pending determination of his eligibility; charges had been filed that Tam had mismanaged union funds and failed to complete assignments. On petition filed by Tam, Federal Judge Samuel King issued a temporary restraining order to keep the union from deleting Tam's name from the ballot.
A month later, Rutledge, in federal court, stated that he wanted the U.S. Labor Department to run the election. When the department, through its Labor Management Services Administration, agreed to handle the election, Rutledge told a news conference that the union would agree to federal supervision of the election, but added that if Tam is elected, the union alone would decide whether he could hold office "because he was found guilty of a narcotics offense" (the previous summer, Tam had pleaded no contest to a misdemeanor charge, based on marijuana plants in his apartment. The court deferred acceptance of a guilty plea and then expunged the record on payment of $100 by Tam to the General State Fund).

The old clause provided that an employee with three or more years of service (or one or more years "in cases of compelling personal reasons") would be granted a leave of absence without pay with accrual of seniority up to six months. The new provision limited seniority accrual to three months and also required the leave to ". . . be taken in conjunction with any available vacation time."

Extreme confusion existed since the duly elected Secretary-Treasurer had been removed by other officers of Local s. A review of audit reports indicated a clarification of assets and liabilities needed to identify assets belonging to Local 5.

In April 1979 King dismissed all counts of the complaint filed by Tam against Rutledge and Local 5. He was further considering the complaint against the International.
In August he ruled that the trusteeship was legal and said it was up to the U.S. Secretary of Labor to decide whether or not a local election should be held. In late September he ordered an election to be supervised by the U.S. Department of Labor, with balloting to be completed by January 15, 1980.

When first offered the option in April 1980, the business agent beat and kicked Tam, leaving him with a broken wrist, a fractured eardrum, and other injuries. Tam originally filed criminal charges against the business agent but some four months later withdrew the charges.

'In addition to these cases, other cases, mostly involving division of property filed in the First Circuit Court, State of Hawaiʻi, included:

Case No.: 51529

Plaintiff: Local 5

Issue:Return of loan from Local to Unity House (for building of hotel)

Disposition: Settled before trial

As of early 1987, when this is being written, the value is probably over $25 million.

Judge Au issued two decisions-a Findings of Fact and Conclusion of Law in November 1985 and then an Amended Findings of Fact and Conclusion of Law in January 1986.

All of these incidents will be more fully covered in later sections. Although none of them directly bear on Master Agreement negotiations, they are briefly covered here insofar as they probably contributed to a psychological atmosphere that made Tam and other Local S leaders reluctant to assume new risks arising out of a more militant stance against the employers.

Although Tony Rutledge continued to deny any connection with the new union, there were unmistakable signs of ties to organizations and persons controlled by Art Rutledge. Tony, himself, assisted in the presentation of the petitions before the NLRB. The new union Used the Unity House (also the Teamster's address). The petitions were signed by an attorney who was also a former Teamster employee; they were filed by a Local 555 employee.

During these negotiations, the independent union had also filed a petition with the NLRB for representation and was actively seeking to organize these employees.

This prediction proved to be flatly wrong. As the Bank of Hawaii Annual Economic Report 1985 pointed out, the statewide occupancy rate (76.0) in 1984 was the highest since 1978, the Waikīkī rate (82.6) was the highest since 1976. "These are remarkable levels in view of the fact that hotel room inventory for the state has risen by 50 percent in the last 10 Years."

See pp. 54-55 for a history and explanation of the MOB provision.

A prediction that appeared to be accurate within the next year. Tam, in a report in the local's paper (March-April issue) explained that the union's health and welfare consultant "advised us on how much the cost would be to maintain benefits in the next three years and to build up reserves to a three month level."

These included Kona Hilton and the Kauai Sheraton (0-7%-6%) and the Sheraton Molokai (2%-2%-5%).

In a three-year contract executed May 31, 1984, effective June 1, 1984, the ILWU negotiated equivalent wage and benefit provisions with the Council of Hawaii Hotels for their members employed in neighbor island hotels. There were variations in wage increases for the Naniloa hotel, King Kamehameha, and Kona Surf.
For a more detailed comparison of the two Master Agreements, see Part III, "Statewide Negotiations".

Estimates on the number of letters sent out vary from 200+ to 1700, depending on who makes the estimates.

Only two hotels, Outrigger Surf and the Waikiki Surf have separate ownerships; Kelley has a majority interest in both.

We can piece together parts of the picture.
Moon, in a talk before Reef Hotel employees in February 1984, identified himself as an official of Allied Properties which handled security for 16 Kelley properties. He personally participated in the Reef negotiations on the company side of the table.
Before that he was an active participant in the Prince Kuhio situation as an apparent coordinator of security forces during Local 5 picketing.
Moon never returned several telephone calls requesting an interview.
Dr. Richard Kelley, in an interview on March 27, 1986, identified Moon as a "friend." When pressed for further details, he retorted with, "I'd rather not answer that."

The union still has contracts with some 10 of the beach hotels on Oʻahu.

The ILWU has organized some few condos on Maui and Kauaʻi but they constitute only a small fraction of the total.